Agnico Eagle Mines (AEM) PriceWatch Alert Up To 12.58% Downside Protection

Posted on Tuesday, September 02, 2008 8:07 AM

Agnico Eagle Mines (NYSE: AEM) closed yesterday at $57.24. So far the stock has hit a 52-week low of $43.75 and 52-week high of $83.45. Agnico Eagle Mines stock has been showing support around 55.43 and resistance in the 59.49 range. Technical indicators for the stock are Bearish. AEM appears on the Investors Observer Volume Leaders list. For a hedged play on this stock, look at a Nov '08 55 covered call (AEM KK) for a net debit in the $50.04 area. That is also the break even stock price for this trade. This covered call has an 81 day duration, provides 12.58% downside protection and a 9.91% assigned return rate for a 44.67% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the AEM Jan '10 25 Call (LLR AE) and selling the Nov '08 55 call (AEM KK) for a $27.15 debit. The trade has an 81 day life and would provide 8.89% downside protection and a 10.50% assigned return rate for a 47.00% annualized return rate (for comparison purposes only). Agnico Eagle Mines has a current annual dividend yield of 0.32%. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]